The Department of Trade and Industry (DTI) yesterday said the benefits of Regional Comprehensive Economic Partnership (RCEP) are more superior than those afforded by the free trade agreements (FTA) Asean, of which the Philippines is part, has with the rest of the RCEP countries.
At the hearing of the Senate subcommittee on RCEP chaired by Senate pro tempore Loren Legarda yesterday, DTI assistant secretary Allan Gepty illustrated how the Philippines can have better access for cacao, canned pineapple, papayas, agriculture inputs and garments under RCEP versus under Asean plus one FTA not just through tariff cuts but also in terms of raw materials sources and simplified trading rules.
On canned pineapple, tariff is brought down to zero under RCEP but the product is slapped 5 percent tariff when shipped to China.
Gepty said competitors Thailand, the top source of the product, and Indonesia, the third, would likely be a more favorable source than the Philippines, the second top supplier.
“It is just not just missed opportunities but other countries benefit (from our exclusion in RCEP),” Gepty said.
For cacao, Gepty said the Philippines can enhance the industry by not just exporting raw cacao.
He said farmers can partner with investors for processing cacao into chocolate with raw materials to be sourced from RCEP countries like butter from Malaysia; dairy from New Zealand and sugar from Thailand.
The Philippines, he said, would also benefit from simplified rules in doing trade.
Gepty said RCEP countries are a big source of agriculture inputs: 74 percent of the country’s fertilizer particularly from China, Indonesia, Korea, Vietnam and Japan; 78 percent of machinery; 85 percent of tractors and; 70 percent insecticides.
“Even if tariffs on these products are at zero under Asean plus one FTA, RCEP is more superior because it is easier to import as the deal lessens the administrative cost which in turn lowers the cost of the product,” Gepty said.
On garments, Gepty said exporting countries can source from 14 countries of RCEP, but the Philippines has a limited source.
Gepty said Lao, Myanmar, Cambodia can source raw materials from China and export their finished garments to Japan and Korea under preferential tariffs. The Philippines without RCEP could only source from Asean, Japan and Korea under Asean but cannot source from China because it will not pass the rules of origin.
Papaya from the Philippines at a certain point will continue to be slapped 24 percent tariff if exported to Korea when competitors can enjoy reduced duties. Irma Isip
